ERP Implementation: Business Information

7th February 2012

If you are like many business executives, your goal is not really an integrated software system, it is better business information and analysis capability. ERP is just a necessary evil to get there. If this is true, be prepared to be patient, and to earmark investment money for after go-live.

Forget Everything You Know

You need to be prepared to be patient because every single reference point you used to know –except for the total - is rendered irrelevant at go-live of an ERP system. Calling it an apples-to-oranges comparison would be insulting to the word “dissimilar”; this is apples to billiard balls. Think about a very straightforward term: revenue. Can revenue be different between ERP and legacy? The answer is “yes”, within limitations. The first thing to be clear about is that the overwhelming amount of revenue – cash received from a customer for the goods or services the company produces – should be calculated and reported exactly the same. All of the confusion and discussion occurs around the perimeter of normal revenue. Is prepaid freight, added to the invoice, part of revenue, or is it a cost variance? How about a quality credit? Clearly that has to be negative revenue; does it show up the same way in ERP as it did in legacy? Are customer rebates negative revenue, or are they cost of sales? I’m not here to offer answers to these questions, only to emphasize that the accounting people will reclassify the way you handle some of the numbers in the ERP system. If you do not take the time to understand the changes, you will assume ERP is generating faulty information. Then you will waste the organization’s time sending them off to find out what is wrong with ERP. The other reason to be patient is that you will find that you were previously shielded from a lot of business mistakes. When legacy programs recognized improbable data they were coded to discard the data, rather than upset the boss. There is no place to hide messy data in ERP; and it can be initially horrifying to see for the first time how many mistakes and poor decisions are being made.

Think Beyond Go-Live

The reason you need to earmark investment money for post go-live is that building a robust infrastructure for business information cannot happen in earnest until real data is flowing through the ERP system in sufficient quantities to highlight problems. Also, take the time to understand in general how the information is reaching the report, chart, or screen that you are looking at. Whenever possible, use source reports from your ERP system. But if you have a business analytics tool, then chances are you have to build intermediary databases formatted for the tool, and that also takes time and costs money.

There is enormous sense of freedom when you learn that the world is different than you thought it was. ERP business information can help you get to that freedom, if you have the patience and apply the resources.